Biomethane is set to be cut out of Germany's Germany's Renewable Energy Act (EEG) support scheme entirely. While the core funding instruments for biomass are staying in place, biomethane looks set to lose the one funding pathway that has made new, flexible CHP projects bankable.
The cabinet draft of EEG reform signals where German biomass policy is heading: away from pure capacity expansion, toward market integration and system-serving flexibility. For flexible bioenergy, that's the right direction in principle. What makes it hard to square, though, is that biomethane — a fuel uniquely suited to making flexible renewable power generation possible — is the one technology losing a clear funding path altogether.
No funding pathway left for biomethane in Germany’s electricity production
Under the current draft, dedicated biomethane tenders are being scrapped, taking with them the only established investment route for highly flexible biomethane combines heat and power (CHP) plants. No successor mechanism is currently planned. At the same time, biomethane still isn't eligible as a remunerated fuel under the general biomass tenders. In practice, that means biomethane CHP plants can't compete in those tenders, and flexible biogas plants can't use biomethane as a supplementary fuel either. After roughly 20 years of supplying flexible renewable power, biomethane would effectively fall out of the EEG funding framework altogether.
From a system perspective, that's hard to justify. Especially amid ongoing geopolitical pressure, flexible, domestically produced renewable energy carriers like biomethane are exactly what's needed to safeguard security of supply.
The ministry's rationale points to weak demand in recent tender rounds and growing demand for biomethane in other sectors. The German association Hauptstadtbüro Bioenergie sees it differently: it traces that weak demand back to the unfavorable regulatory conditions of previous EEG versions in the first place.
What this means for biomethane producers in Germany
The political signal is clear: biomethane is meant to flow increasingly into heat, industry, transport, and shipping rather than power generation. For producers and project developers, that shifts the core strategic question from "how do I secure the next tender round" to "which offtake market holds the greater value going forward." Heat, industrial processes, heavy-duty transport, and shipping — via bio-LNG, for instance — move into sharper focus as outlets, ahead of the power sector.
That reorientation isn't just a paperwork exercise for existing plants — it can mean a significant operational lift. Many operators may need to switch feedstocks and supply chains and adapt them to new target markets such as transport fuel or shipping. New verification and sustainability certification requirements come with that shift, adding to the investment and time pressure — particularly for plants facing a near-term loss of current support.
Tender volumes and price caps for biomass: stabilization or managed decline?
Biomethane is staring down a funding gap; the picture for the rest of biomass is more mixed. On the plus side, biomass and biogas plants remain exempt from the new revenue-skimming mechanism — no additional payment obligations, no clawback during high-price periods, which is a meaningful incentive for flexible feed-in.
Biomass tenders continue through 2032, with a modestly raised capacity target (9 to 9.5 GW) — a target that already roughly matches today's installed capacity. The Hauptstadtbüro Bioenergie doesn't read that as stabilization but as a "gradual erosion of secured, domestic bioenergy capacity at gigawatt scale."
Bid caps for biomass will be fixed based on the Federal Network Agency's (Bundesnetzagentur, BNetzA) current figures (€0.1943/kWh for new plants, €0.1983/kWh for existing plants). That looks like planning certainty on the surface, but it offers too little incentive for flexibility and modernization — especially since the regulator can revise these values at any time. According to the association Fachverband Biogas, that at least limits any short-term downward correction, but the regular tender in particular would need a higher cap; the association rejects the proposed degression rules outright.
The existing three-year-average cap on follow-on support is being dropped, which simplifies the transition for existing plants by removing the need for a separate averaging calculation.
Other notable changes for biogas and biomethane:
- Small manure-based plants come out as clear winners: the EEV scheme is extended to 2031, follow-on support runs for 12 years instead of 10, and remuneration rates rise significantly — provided at least 80% of feedstock is manure and the EU Commission signs off on state aid clearance.
- The so called corn cap rises from 25% to 30% but remains in place; industry associations continue to push for scrapping it entirely.
- Verification requirements get stricter: operators who fail to meet them now lose their entire EEG payment claim, rather than just the difference to market value as before — including the flexibility premium. Documentation shifts from an administrative burden to a genuine financial risk.
Sharp criticism from the industry
The core demand from the industry on biomethane is unambiguous: biomethane must remain eligible for support, either through a dedicated tender category or by opening up the general biomass tenders to it. A draft that leaves biomethane with no route to funding at all falls short of its own stated goal of a resilient, import-independent energy system — a contradiction the Hauptstadtbüro Bioenergie points to directly, especially given that new gas-fired power plants are simultaneously getting more generous support.
The association also stresses that the pressure to act on bioenergy rules in the EEG is enormous: thousands of bioenergy plant operators are ready to invest, but are being held back by inadequate regulation — particularly existing plants that the coalition agreement had promised a path forward. The draft, in the association's view, falls well short of those commitments, and the proposed tender volumes amount to a de facto wind-down path for the existing plant fleet.
Where this leaves things — and what happens next
The draft acknowledges the value of flexible biomass, but still falls short of what the industry says it needs to play a long-term role in the energy system. For biomethane specifically, the draft raises a fundamental question about its future role in the power sector — up to now its largest offtake market — and puts that role genuinely in doubt.
Following cabinet approval on July 29, 2026, the decisive phase of the parliamentary process now begins. This fall offers a real opportunity to amend the draft to unlock investment and put bioenergy's potential to full use. The exact timeline in the Bundestag isn't set yet, and the parallel state-aid review in Brussels is still ongoing. The reform is due to take effect on January 1, 2027.